Added credit renewal info to Sales handbook #10598
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| * If they will run out of credit or wish to buy more within the **first 6 months** of the contract term, they can still take advantage of their initial discount. You'll need to have them sign a new order form which adds the additional credit, and it should expire on the date of the original order form. | ||
| * Example: Their original order form was signed on 1st January with a 12-month term. Their expansion order form could be signed on 1st June with a 7-month term. Make sure the end date lines up with the end date of the original contract to avoid any issues with the billing server and ARR calculation. | ||
| * If they will run out of credit with **less than 2 months** remaining on their initial term, as long as they sign a renewal order form to start at the end of the original contract term we will cover their usage for free until the renewal date, assuming the renewal order form is signed before they run out of credit. | ||
| * If they fall **in between** the two cases above (running out of credit with <6 months and >2 months to go) then we need them to sign a new 12 month (or longer) order form lined up with their monthly billing date. This makes ARR calculation slightly trickier as there are two overlapping contracts in play at the same time. |
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Could we do something quite aggressive tactically here to lock them into a longer contract eg make the remainder of their initial contract at a bigger discount and then sign a new 12 month contract at an upgrade from initial terms. Just thinking that the longer they are tied down, the better it is for LTV, retention and locking out competitors.
Something like, we'll give you and extra 20% discount on the remainder of this term for more credits and your renewal rate is at an increase of the initial 12 months MRR. We might take a slight hit in MRR but that should increase for year 2 and we get 24 months in total?
Might not work out that good in reality as haven't had a look at the numbers.
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I like the concept. I'm new here, so it's hard for me to gauge renewal conversations and whether a company that has burned through credits would appreciate the additional discount and not balk at the longer term, or resent the longer term as they'd burned through their credits ahead of their existing term.
Would probably depend on how they burned through the credits. If inefficient usage, then angry.? If due to business growth, then interested (but isn't that where we'd want to hold margins and only grow with volume)? If else...?
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So yeah I guess it's an alternative option, again I haven't gone through the in's and out's of the outcome but basically something along the lines of
Customer signs up for $50k deal ($75k credits) burns through them in 8 months, they have 4 months left we say - you need $25k credit for the rest of the 4 months, you can have them for $12.5k(50% discount) if you sign up to a new 12 month deal at the end of that period for $75k. So they pay us $12.5k now(net30) and $75k in 4 months(net30).
Short term bump on ARR for us and then a larger long term bump. We've also locked them in.
I guess the alternative is they sign up to a $75k deal for 12 months (or similar). Which we can obviously still offer them.
I don't know how customers would react to this in reference to them burning through credits efficiently/inefficiently.
The downside is we perhaps leave some money on the table but I think having customers locked in is a huge, huge win for us as we make the product more and more valuable over time.
Changes
Documented how we should approach different levels of credit expiry and rollover
Checklist
vercel.json